Introduction to Chicago Mercantile Exchange Group

The CME Group Inc. is distinguished as one of the world’s largest and most diverse derivatives marketplace. It owns large derivatives, options and futures exchanges in Chicago and New York City using their trading platforms such as CME Globex trading and CME Clearing. CME Globex trading is a global electronics trading platform that enables users worldwide to access markets in all of the products it trades. CME Clearing is a means to handle settlements and provide clearing of exchange trades in the over-the-counter (OTC) market. [1]

Today, The CME Group Inc. operates 4 major futures exchanges:

1. Chicago Mercantile Exchange (CME)

2. Chicago Board of Trade (CBOT)

3. New York Mercantile Exchange (NYMEX)

4. Commodity Exchange Inc. (COMEX)

In 2007, this corporation was formed by a merger of the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT). In the following year, it bought the New York Mercantile Exchange. [2] For more than a century, CME Group has made its mark in the global economy by working with innovations in trade while offering the widest range of global benchmark products across all major asset classes. These classes are based on interest rates, equity indices, foreign exchange, energy, agriculture, energy, metals, weather and real estate. Altogether, The CME Group reportedly handles 3 billion contracts worth approximately $1 quadrillion annually. [3]

On recent news article, it is said that newly appointed global head, Trey Berre will bring his extensive operational knowledge to the table which will then drive the data services business towards long term growth. Trey Berre will be responsible for overseeing CME Group’s contracts and portfolio of historical, real-time and derived data products and services. [4]

Open Outcry Method

As portrayed in many movies, open outcry is the method of communication between dealers on a trading floor involving stock exchange or futures exchange. A few characteristics of this method include shouting and hand motions to seal bids primarily about buy and sell orders. There is now said to be little to none trading involving the traditional open outcry method although 80 percent of trading is done electronically through CME Globex electronic trading platform. BoxOptions which is an automated exchange owned by TMX has argued that open outcry trading is better for large transactions and that its new trading floor would encourage better participation in larger trades. [4] Unfortunately open-outcry pits have gone away with the rise of electronic trading over the last decade.

Regulations of CME

CME Group has a Market Regulation Department with the purpose of conducting surveillance of trades, positions, accounts and markets and prevent violations of exchange rules and other securities laws. This department ensures that its designated contract markets (the four major futures exchanges) – CME, CBOT, NYMEX and COMEX – are performing up to standards and are self-regulatory. [3] In the past four years, CME Group’s market data business has tripled its volume of market data from international participation growing more than 16 percent. In addition, CME Group provides market data for 36 benchmark products which is more than any other exchange. [5] As a result, we can see that the CME Group is a very secure, competitive yet accomplished and financially sound market.